Holding Company for Exchange LA Nightclub Files for Bankruptcy

The holding company for trendy Los Angeles nightclub Exchange LA has filed for Chapter 11 bankruptcy as it fights the city of Los Angeles and its embattled landlord to keep the party pumping at its historic venue.

The filing is only the latest move in the ongoing legal battle for Exchange LA’s venue, the Pacific Stock Exchange Building, a location that’s no stranger to financial crisis. The historic property in downtown L.A. broke ground in 1929, just three days before Black Thursday, according to the website. It opened its doors in 1931, as the country was deeply entrenched in the Great Depression.

Nearly a century later, the trading room floor has been transformed into a dance floor where patrons invest in $15 cocktails and throw up hand signals to the beats of famous DJs.

“Literally thousands of people wait in line to pass the vigorous security clearance in order to enter the venue, which features the most sought after DJ’s and Promoters in the World. The event venue is ranked in the top 60 entertainment venues in the World,” the holding company, Hawkeye Entertainment, said in court papers.

But Exchange LA’s future in the space is under threat, according to a bankruptcy petition filed Friday.

Hawkeye Entertainment (which shares owners with Exchange LA and holds its property lease) is owed millions of dollars by its landlord, an entity called Pax America Development LLC that’s been dissolved, it said in court papers.

The company had to shell out millions of dollars for improvements and repairs to stay in compliance with city code, money that it should have been repaid by Pax, it said. But the property was sold outside the bankruptcy process, according to documents filed in another case, to a lender owed $1.7 million, and Hawkeye has never been repaid.

As a result of the disputes and additional work required, the city of Los Angeles won’t issue a final certificate of occupancy for the property, the company said in court documents.

Hawkeye was able to obtain a temporary certificate, which must be renewed every six months. The company, however, risks the city deciding not to renew its temporary certificate at any time, even if it has events, which cost as much as $40,000, booked into the future.

“That would have devastating consequences to Hawkeye and the business, exposing Hawkeye to substantial liability and jeopardizing the business operations,” it said in court documents.

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